You've raised a good question. I had a friend point this text out to me at Christmas, as "proof" that the Christmas tree was a pagan practice.
Let me begin by cutting and pasting the commentary on these verses from the Bible Knowledge Commentary:
Jeremiah 10:1-5. The first 16 verses of chapter 10 are parenthetical. Before continuing his discussion of the coming Exile, Jeremiah focused on the nature of the God who would bring this judgment. God addressed the entire house of Israel, which included the Northern Kingdom already in exile, and explained the foolishness of idols. Israel was not supposed to learn the ways of idolatry practiced by the nations around her, nor was she to be terrified by signs in the sky. These ”signs“ were most likely unusual occurrences such as eclipses or comets which were thought to be signs of coming events given by the gods.
Such idolatrous practices were worthless (heḇel, ”breath“; cf. comments on heḇel in Ecc. 1:2) because the ”gods“ being honored were created by their worshipers (cf. Isa. 40:18-20). A person would chop down a tree, give the wood to a craftsman who fashioned it to the desired shape. This ”god“ was then covered with silver and gold and fastened to a base so that it would not totter. Once the god was made by man it had to be carried to its destination. It was as lifeless as a scarecrow in a melon patch. Certainly such a ”god“ could not speak to impart knowledge to its followers. So God exhorted His people not to fear those false idols. The idols had no power to harm those who disregarded them or power to do any good for those who followed them.
Walvoord, J. F., Zuck, R. B., & Dallas Theological Seminary. 1983-c1985. The Bible knowledge commentary : An exposition of the scriptures. Victor Books: Wheaton, IL
If we are to interpret Jeremiah 10:1-5 correctly, we should do so I the light of other Scriptures, more than by the mere similarity of a word or two (i.e. "tree"). I think that Isaiah 44:12-28 speaks of the same thing:
12 A blacksmith works with his tool and forges metal over the coals. He forms it with hammers; he makes it with his strong arm. He gets hungry and loses his energy; he drinks no water and gets tired. 13 A carpenter takes measurements; he marks out an outline of its form; he scrapes it with chisels, and marks it with a compass. He patterns it after a man, like a well-built man, and puts it in a shrine. 14 He cuts down cedars and acquires a cypress or an oak. He gets trees from the forest; he plants a cedar and the rain makes it grow. 15 A man uses it to make a fire; he takes some of it and warms himself. Yes, he kindles a fire and bakes bread. Then he makes a god and worships it; he makes an idol and bows down to it. 16 Half of it he burns in the fire— over that half he eats meat; he roasts a meal and fills himself. Yes, he warms himself and says, ‘Ah! I am warm as I look at the fire.’ 17 With the rest of it he makes a god, his idol; he bows down to it and worships it. He prays to it, saying, ‘Rescue me, for you are my god.’ 18 They do not comprehend or understand, for their eyes are blind and cannot see; their minds do not discern. 19 No one thinks to himself, nor do they comprehend or understand and say to themselves: ‘I burned half of it in the fire— yes, I baked bread over the coals; I roasted meat and ate it. With the rest of it should I make a disgusting idol? Should I bow down to dry wood?’ 20 He feeds on ashes; his deceived mind misleads him. He cannot rescue himself, nor does he say, ‘Is this not a false god I hold in my right hand?’ 21 Remember these things, O Jacob, O Israel, for you are my servant. I formed you to be my servant; O Israel, do not forget me. 22 I remove the guilt of your rebellious deeds as if they were a cloud, the guilt of your sins as if they were a cloud. Come back to me, for I protect you.” 23 Shout for joy, O sky, for the Lord intervenes; shout out, you subterranean regions of the earth. O mountains, give a joyful shout; you too, O forest and all your trees! For the Lord protects Jacob; he reveals his splendor through Israel. 24 This is what the Lord, your protector, says, the one who formed you in the womb: “I am the Lord, who made everything, who alone stretched out the sky, who fashioned the earth all by myself, 25 who frustrates the omens of the seers and humiliates the omen readers, who overturns the counsel of the wise men and makes their advice seem foolish, 26 who fulfills the oracles of his prophetic servants and brings to pass the announcements of his messengers, who says about Jerusalem, ‘She will be inhabited,’ and about the towns of Judah, ‘They will be rebuilt, her ruins I will raise up,’ 27 who says to the deep sea, ‘Be dry, I will dry up your sea currents,’ 28 who commissions Cyrus, the one I appointed as shepherd to carry out all my wishes and to decree concerning Jerusalem, ‘She will be rebuilt,’ and concerning the temple, ‘It will be reconstructed.’”
A man plants a tree (his own labor), and cuts it down (his own labor). Half of the tree he burns in the fire (it certainly does him no good, other than to warm him and cook his food). The other half the man fashions into some "god," the product of his own hands. He created this "god," and he must carry it around. We worship the God who created us, and carries us. How foolish to worship something made of wood, rather than the One True God.
There are superficial similarities between our Christmas tree and the tree of Isaiah or Jeremiah. The Christmas tree is, at best, a symbol. It is not something we worship as a god. Is it something we can do without? It certainly is. But is an idol, a profane thing that we worship, in which we place our trust? I think not.
I can accept the fact that some may refrain from using a Christmas tree out of conscience, but this is not a matter that should be debated, or over which we should divide (see Romans 14:1--15:12).
You may find these articles on the BSF Website helpful: